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Cooperation is the Key to NATO's Future

With many alliance nations strapped for cash, the United States has had to bear a disproportionate amount of NATO’s defense costs. A set of innovative policies could change this.

At a White House press conference on 3 June, President Barack Obama delivered a statement that echoed a familiar sentiment from U.S. administrations dating back for almost the entirety of NATO’s 65-year history:

The United States is proud to bear its share of the defense of the Transatlantic Alliance. It is the cornerstone of our security. But we can’t do it alone. And we’re going to need to make sure that everybody who is a member of NATO has full membership. They expect full membership when it comes to their defense; then that means that they’ve also got to make a contribution that is commensurate with full membership. 1

The U.S. desire for its NATO partners to adopt a greater portion of the alliance’s defense burden is certainly nothing new. Recent events, however, have exacerbated the transatlantic divide over cost sharing to arguably its greatest extent ever.

Since the collapse of the Soviet Union, NATO’s operational commitments have expanded tremendously. The alliance had never conducted an offensive military operation during its first 40 years despite existing under the constant shadow of the nearby Soviet threat. During the last 20 years, however, NATO operations have been conducted in the Balkans, Afghanistan, Iraq, Libya, and elsewhere around the world. Meanwhile, Russia’s increasingly aggressive and expansive foreign policy, exemplified most dramatically in Georgia and Ukraine, has required a recommitment to the alliance’s traditional defensive posture toward the east. Even as NATO’s global commitments have grown, defense spending among the vast majority of its membership has been steadily declining due to the world economic downturn, domestic political pressures, and continued fiscal problems afflicting many of the alliance members. Even the United States has been forced to make dramatic cutbacks in defense operations and force structure due to budget constraints. Faced with the staggering costs of bearing what it perceives to be an unfairly large share of the global defense burden, the United States has recently stepped up pressure on its allies to contribute a larger share to NATO’s capabilities and operations.

Unfortunately, even the United States’ most promising efforts on this front have often proven futile. In 2006, the Bush administration seemingly achieved a breakthrough when it managed to gain a commitment from its NATO allies that every member state would spend at least 2 percent of its gross domestic product (GDP) on defense. But eight years later, this spending threshold is met by only 3 of the 27 non-U.S. NATO members: Estonia, Greece, and the United Kingdom. The average share of GDP spent on defense by non-U.S. NATO members was just 1.6 percent in 2013.

The United States, by comparison, spent 4.4 percent of its GDP on defense in the same year. In terms of dollars, these figures equate to a U.S. defense-spending total of $735 million in 2013 compared to a total of $288 million across the combined defense budgets of the remaining NATO allies. 2 The growing gap in defense capability that has resulted from years of large defense-expenditure differentials between the United States and its allies has been cause for consternation among U.S. leadership, as evidenced by Secretary of State John Kerry’s exhortation at NATO’s Brussels headquarters on 25 June that “Every ally spending less than 2 percent of their GDP needs to dig deeper and make a concrete commitment to do more.” 3

Regrettably for the United States, hopes for large-scale increases in its allies’ defense budgets are unrealistic in the near term due to the domestic economic and political realities facing the governments of those nations. Therefore, the United States must find additional paths, outside of increased spending, to more equitable sharing of the defense burden with the rest of NATO. Fortunately, the alliance is ripe with opportunities to deliver enhanced military capability—even in the absence of larger outlays. By adopting a set of structures, processes, and policies to advance cooperation between its members, NATO can improve the efficiency with which it fields its military capability, which, in turn, would relieve the United States of a portion of its defense burden while simultaneously boosting the alliance’s military strength. In order to achieve these goals, the United States must be an agent for change within NATO and drive a series of initiatives that will enhance the organization’s defense-capability output by establishing research centers, adopting cooperative acquisitions, and coordinating operational capabilities.

Establishing Research Centers

While the United States and its NATO allies enjoy a level of superiority over the rest of the world in most aspects of defense technology, the ever-competitive nature of global weapon-systems development brings constant pressure to push the technological envelope ever further. One way for NATO to ensure it maintains its technology edge in a cost-effective manner is to examine contemporary best practices in research and development (R&D) from private industry. Many large corporations with diverse technology product portfolios, such as General Electric and United Technologies, operate corporate research centers to pool talent and focus on achieving breakthroughs that benefit multiple business units. This is in contrast to concentrating all R&D activities within each independent business component, which would ultimately be less effective because of the relative dislocation of talent and lack of coordination across the corporation. Furthermore, many of these same industry leaders have a successful history of joining with outside organizations to establish collaborative, multinational research centers that combine the resources of multiple corporations, academic institutions, and government agencies to achieve technological breakthroughs that benefit all partners involved.

Today, R&D within NATO is largely locked into national silos, much like a company running independent R&D operations within each of its lower-level business units. NATO’s Science and Technology Organization (STO) is intended to counter this by promoting collaborative technology research, but its activities are limited in breadth and depth, and the overwhelming majority of substantive R&D within the alliance occurs outside of its purview. It is also not all-inclusive of even the modest amount of cooperative R&D presently being conducted between NATO partners. Outside of the STO, common efforts are principally ad hoc and bilateral in nature, such as the biofuels cooperation initiative signed by the U.S. and Italian navies in April 2014.

While arrangements like these are a good start, private-sector experience has shown that a more vigorous multilateral research-center model can have high upside benefits. NATO should therefore establish a system of multinational research centers that combine industrial, academic, and governmental resources from across the entire alliance to tackle today’s toughest defense-technology challenges. Candidate focus areas could include everything from alternative fuels to air-breathing hypersonic flight. The United States should encourage its NATO allies to elevate existing domestic and bilateral R&D efforts, along with their associated funding, to these centers to the most practical degree. Partner nations would then be able to combine their financial resources to more cost-effectively pursue R&D ventures while also realizing the benefits of diverse multinational teams that bring a broader range of knowledge, experiences, and perspectives to research projects. By tapping into talent from across the member states and combining resources to focus on major challenges, NATO research centers would have the potential to enhance allied R&D output significantly, while also reducing duplicative effort within the alliance.

Adopting Cooperative Acquisitions

Despite the existence of bodies intended to promote acquisitions cooperation, such as the Conference of National Armaments Directors, NATO suffers from a tremendous amount of duplicative weapon-system development and production efforts. For example, during the last decade, no fewer than six different classes of frigates were commissioned by NATO members, and this total does not even include the United States’ frigate-like littoral combat ship and national security cutter. Such a large number of different designs is excessive considering the similar mission sets these ships were intended to fulfill. Furthermore, benefits from competition between these designs were minimal, as most were not delivered to any NATO customers outside of their source nation. It seems that the parallel design and production of these ships was primarily driven by domestic political and industrial-base considerations. While these are normally valid concerns for any country, the immense wasted cost of the simultaneous development of similar capabilities is no longer an acceptable option for NATO members that are struggling fiscally and losing the capacity to maintain credible military strength.

The Transatlantic Defense Technological and Industrial Cooperation initiative has recently advanced the conversation on cooperative acquisitions among the NATO allies. The United States must now capitalize on these discussions by taking a leading role in shifting the acquisitions paradigm within NATO toward a cooperative system, complete with authoritative structures similar to the Department of Defense’s Joint Requirements Oversight Council and Defense Acquisitions Board. This will keep the member states from wasting billions of dollars on developing and acquiring duplicative systems independently of each other. Many alliance members have previously cooperated on a handful of highly complex acquisition efforts, including the Panavia Tornado and Eurofighter Typhoon multirole fighter aircraft. Multinational programs like these must be pursued to the maximum extent possible. The increasingly robust multinational supply-chain capabilities that have been adopted by the aerospace and defense industries in recent years should be used to encourage member states to more readily accept the purchase of systems that were originally designed in other NATO countries by strategically distributing production work throughout the alliance. Member states should be further incentivized to acquire systems from their NATO allies by coordinating reciprocal purchases of systems when needed. In addition, it is vital to the facilitation of these efforts that the United States continue its ongoing President’s Export Control Reform Initiative to eliminate trade barriers that could stymie enhanced defense-systems cooperation with the rest of NATO.

The United States has the opportunity to set a strong example in cooperative acquisitions with the Air Force’s upcoming T-X advanced jet-trainer program, which is intended to replace the aging T-38C Talon fleet during the next decade. Rather than build a new jet trainer from scratch and bear the associated developmental costs and risks, the Air Force should purchase an existing aircraft developed by an alliance partner, such as Italy’s Aermacchi M-346 or the United Kingdom’s BAE Systems Hawk T2. A similar opportunity exists for the U.S. Navy, which was recently directed to conduct studies for a small surface combatant to potentially acquire as a follow-on to the LCS. The Navy should seriously examine acquisition of a proven, modern frigate design, such as the Danish Iver Huitfeldt or Italo-French FREMM, then press for adoption of this ship class as a common NATO frigate that could also fulfill other emerging small surface-combatant needs across the alliance, to include the Royal Navy’s Type 26 frigate requirement.

The future will bring countless opportunities for NATO members to reap the benefits of acquiring systems cooperatively with their allies, which would reduce overall development spending, decrease acquisitions costs through increased production scale, and improve interoperability with common hardware. These benefits cannot be responsibly passed up considering today’s constrained budget environment. By realizing the cost savings of cooperative acquisitions, billions of dollars could be freed up for investment in value-adding systems and operations that would otherwise be unaffordable. This would ultimately build the alliance’s effective military capability without necessarily requiring an increase in top-level defense spending.

Coordinating Operational Capabilities

Finally, NATO could further enhance the efficiency with which it fields military force by better coordinating its operational capabilities. One way to do this is to establish more integrated, multinational NATO combat units. This would be especially useful for niche warfare capabilities that are too expensive for most member states to reasonably maintain alone, but that are essential for successful modern military operations. NATO has had one such integrated operational unit since 1982 that fulfills the airborne early-warning and control mission for the alliance with a fleet of E-3 Sentry aircraft operated by multinational crews. This model should be expanded to include other mission areas in which NATO suffers a capabilities deficiency, including airborne electronic attack and aerial refueling. Additional candidates for movement from member-specific to NATO-wide units could include maritime patrol, strategic airlift, and certain intelligence, surveillance, and reconnaissance missions. Integrated units, such as the notional NATO electronic attack and aerial refueling wings suggested here, would provide a stronger set of capabilities at reduced cost. These assets could be acquired and pooled together, thereby decreasing logistical burdens, and then distributed for operations more efficiently than if they were split between various countries at many disparate bases. Once operational, these units would relieve pressure on the U.S. units that have long been forced to fill NATO capability shortfalls.

For other, broader mission areas, it may not be necessary, or even beneficial, to field a NATO-integrated unit outside of the force structure of each member-state military. At the same time, however, it is not cost-effective for all NATO members to maintain a capability in each and every combat realm. As a result, arrangements similar to the Baltic air-policing mission should be established: Certain NATO countries would be responsible for covering specific mission areas for other member nations. In return, however, the beneficiary nations would be required to maintain another relevant combat capability to effectively pay back the benefits received from their allies. (For example, a country that is not required to maintain an armor capability because it is covered by other NATO members’ armored brigades could be required to maintain a robust air-defense artillery capability instead. Consequently, the air-defense artillery requirements of the nations providing the armor capability would be reduced.) These arrangements would be overseen by a NATO capabilities integration authority, which would be tasked with ensuring that an optimal and effective force structure existed across NATO to fulfill each mission set.

With enhanced coordination of the alliance’s operational capabilities, member states could completely cede certain mission areas in which they struggle to maintain a competency because of a scarcity of resources. This would allow them to reallocate funding to focus on becoming a world-class capability leader in their assigned mission areas. As a result, the overall NATO force would be more integrated and effective, as it would be a confluence of capabilities leaders rather than a collection of independent militaries that are jacks of all trades but masters of none.

If a country wished to retain institutional knowledge in any of the mission areas it had ceded, personnel could be assigned to units in other NATO members’ militaries that were tasked with maintaining that capability. This would further enhance NATO operational integration, and reflect successful existing arrangements such as the Royal Navy’s maintenance of aircraft carrier operations experience among its flight crews by integrating aviators into frontline U.S. Navy F/A-18 squadrons pending the operational service entry of HMS Queen Elizabeth .

Toward an Equitable Future

At a 26 February meeting of NATO defense ministers in Brussels, Secretary of Defense Chuck Hagel implored his counterparts to bolster their defense investments, stating that “If the alliance is to remain effective, adaptable, and relevant, rebalancing NATO’s burden-sharing and capabilities is mandatory—not elective.” 4 Higher defense-spending levels among the NATO allies would certainly help rectify the defense-burden imbalances that currently exist within the alliance, and the United States should absolutely retain this as a long-term goal. However, other methods could be employed to more equitably share NATO’s defense responsibilities, which would not solely rely on large increases in allied defense expenditures that are unlikely to manifest in the immediate future.

Proposals to improve the cost-efficiency of NATO’s military capability output through enhanced cooperative structures, processes, and policies should be examined and implemented to the fullest extent possible. The United States must take a leading role in the establishment of research centers, adoption of cooperative acquisitions, and enhanced coordination of NATO’s operational capabilities to maximize efficiencies across the R&D, acquisitions, and operational realms. If implemented effectively, the net effect of these reforms will be a much stronger and more cost-effective NATO better able to equitably contribute to global security, stability, and prosperity.

Lieutenant Pagenkopf is a naval aviator assigned to Strike Fighter Squadron 122 on board Naval Air Station Lemoore, California. He holds a bachelor’s degree from the University of California, Santa Barbara, and an MBA from Yale University.